12th March 1930. Most of us might not even remember the day. It was the first act of organized opposition to British rule When the Mahatma broke salt laws in Dandi at the conclusion of the march on April 6, it sparked large scale acts of civil disobedience against the British Raj salt laws by millions of Indians. Well, if not British Raj, this day might have surely inspired a lot of companies to venture into the most basic of all products. To begin with, I remember our eco faculty talking about price inelasticity of demand - Salt is a cheap but an essential good. As the price of salt increases, people do not tend decrease their consumption of salt. And possibly in the marketing sense of it, salt is one product which is mass product. Across segmentation the “customer needs” are the same. Talking of stats, did you know India is the third largest salt producing country in the world with an average annual production of about 148 lakh tones?
These days, there is a TVC run by NIRMA SHUDH NAMAK. Ahh remember that oversmart kid a few years ago, educating the baniyaa? “Shudh nahi samajhte kya?” A much better TVC this time, with positioning efforts not pretty evident. Lets dwell deeper into the case.
NIRMA- a name which is synonymous with the detergent offering, I still remember an hour long discussion in our branding lectures on why they should have used Multiple Branding strategy instead of Brand Extension. But thats another story. Now that the Brand managers at NIRMA decided to play it safe, they have NIRMA SHUDH NAMAK.
Lets see what they have done here. They have shown the raw vegetables in a salad running away from the bombardment of ordinary namak(I like using this word instead of salt). And when they jump out of the window, they see the same NIRMA girl emerging from the sunlight and the vegetables are happy again.
Come to think of it, a very naive campaign. Thanks to the brand managers at TATA Chem (TATA NAMAK), HUL (Annapurna Namak) etc using a bit of rationality in a low involvement product like salt by launching Line Extensions like TATA Salt Lite or the Annapurna Namak’s brilliant Iodised Positioning, the marketing efforts of NIRMA are very lousy. Why?
a. You don’t have a clear differentiation. Why should a habitual buyer of a TATA Salt go for your salt. TATA Salt also has refined free flow technology. What you are showing is grounded ordinary khara namak.
b. No rational factor – Is it good for my or my family’s health? If not is only daana daana ek samaan the reason for purchasing? Thanks but no thanks!
Also a humble request to the professors of BSchools to not glamorise this case by pointing out that the failure of this product is because of the name. I disagree, lack of value positioning is the key for any failure of this product. When NIRMA might have calculated the market size and thought of venturing into its only edible product, they should have totally got their product and positioning of the product correct.
A request to NIRMA, you created magic with your detergent kitty, one way of possible being an ambitious FMCG basket is by launching a few more SKUs in Food segment. Then the acceptability would also be evident. But for the time being, as my guru Jack Trout and Al Reis plead “DIFFERENTIATE OR DIE”
Friday, December 5, 2008
Monday, November 17, 2008
Outsourcing Boom
Today global economy is undergoing a period of uncertainties, organization are not starting new projects or delaying them or are in the mist of controlling the cost cent by cent. What does this mean, does this mean that the outsourcing world is going to end ? in fact, this means that organizations have become more agile for controlling the cost and are taking all necessary measures and steps to ensure that they distinguish between tactical, strategic and operational aspects and based on the business needs take appropriate actions.
Having said all this, let us take an example of a banking organization; it has grown over the years. Initially they started with 3-4 persons staff in their IT department slowly and steadily as the business grew the support structure also grew, the IT department started not only supporting the current set of applications but also started developing new applications to support business and strategic initiatives but also continued to support back office operations. The department had now hundreds or even thousands of people in IT departments. There were many such companies existed about 5 to 10 years ago.
As the awareness of the outsourcing spread the companies started outsourcing their application support work or even IT departments to service vendors, the main reason behind this was not just wage arbitrage but it was more logical as businesses could leverage their existing resources on their core business rather then spending their energies on mundane tasks. Though there are other reasons as well for outsourcing.
Due to recession our example organization can not start rebuilding their IT department as it has huge impact in terms of cost, investments etc but since there is a global melt-down and every company is feeling heat therefore it is not possible to free-up budget to rebuild their IT department. Only thing that organizations can possibly do is to take tiny steps and rebuild their IT departments by in-sourcing rather than outsourcing, but that too requires investment and is a long drawn shot which will not work in today’s competitive world.
The whole genesis of outsourcing is cost cutting and refocusing on core business and create differentiators so that customer comes to you or remain attached with you. Not to forget the quality aspect. Through outsourcing and offshoreing organizations have gradually and slowly but surely globalized their operations. Definitely buy this argument that it is not possible for organizations to stop outsourcing. It is like when you have fired a bullet it is not possible to retract it.
Earlier the period before this recent melt down or economic crisis started companies took discretionary decisions or steps to outsource/offshore some took outsourcing decision because one of their competitor or neighbor was doing it. But now there is no choice for companies but to outsource/offshore as it has not only essential item to reduce cost, optimize operations but also to bring operational excellence. The reduction in running operations cost and finding right skills at optimum price in local market is increasingly becoming challenging. The second most critical dimension to this issue is that if one of your competitors has released a new product or service offerings because of which your customers are switching over to your competitor you can not just sit idle and do nothing.
If we take a perspective from the US angle we see that with the democrat being elected in US, the Democrats are likely to increase unemployment benefits, which already are a disincentive to work. By going this logic people a certain percentage of people who have lost their jobs in this meltdown will choose unemployment to their benefit and would like to remain that way, even if opportunities are there. This situation will also boost outsourcing to little extent.
Therefore force of cost reduction coupled with the fierce competition will force all the organizations to adopt as a mandatory measure outsourcing. Sourcing like offshoreing is a commercial model of outsourcing as it moves the work at right sourced location using right skills at right locations. This would create a new wave of outsourcing. Finding a right kind od IT service provider may become difficult as the IT companies may also have issues supporting such a boom.
Not only that there will be a tremendous rise in demand for outsourcing but also as a golden rule of thumb we know that every crisis creates new opportunities and there are new possibilities will emerge in every segment. The outsourcing service provider firms will have the opportunities to build deeper, wider and long lasting relationships with existing customers by showing caring attitude with improvement in quality, reduction in cost, on time service delivery. Service provider would become more nimble to preserve profits of their customers. The current situation will also redefine assumptions about what can be outsourced.
I agree that demand of the outsourcing may push the prices up a bit but it will also create opportunities which will see many other service players emerge to latch on to these opportunities. This may also open opportunities for low cost south Asian countries to start operations.
Having said all this, let us take an example of a banking organization; it has grown over the years. Initially they started with 3-4 persons staff in their IT department slowly and steadily as the business grew the support structure also grew, the IT department started not only supporting the current set of applications but also started developing new applications to support business and strategic initiatives but also continued to support back office operations. The department had now hundreds or even thousands of people in IT departments. There were many such companies existed about 5 to 10 years ago.
As the awareness of the outsourcing spread the companies started outsourcing their application support work or even IT departments to service vendors, the main reason behind this was not just wage arbitrage but it was more logical as businesses could leverage their existing resources on their core business rather then spending their energies on mundane tasks. Though there are other reasons as well for outsourcing.
Due to recession our example organization can not start rebuilding their IT department as it has huge impact in terms of cost, investments etc but since there is a global melt-down and every company is feeling heat therefore it is not possible to free-up budget to rebuild their IT department. Only thing that organizations can possibly do is to take tiny steps and rebuild their IT departments by in-sourcing rather than outsourcing, but that too requires investment and is a long drawn shot which will not work in today’s competitive world.
The whole genesis of outsourcing is cost cutting and refocusing on core business and create differentiators so that customer comes to you or remain attached with you. Not to forget the quality aspect. Through outsourcing and offshoreing organizations have gradually and slowly but surely globalized their operations. Definitely buy this argument that it is not possible for organizations to stop outsourcing. It is like when you have fired a bullet it is not possible to retract it.
Earlier the period before this recent melt down or economic crisis started companies took discretionary decisions or steps to outsource/offshore some took outsourcing decision because one of their competitor or neighbor was doing it. But now there is no choice for companies but to outsource/offshore as it has not only essential item to reduce cost, optimize operations but also to bring operational excellence. The reduction in running operations cost and finding right skills at optimum price in local market is increasingly becoming challenging. The second most critical dimension to this issue is that if one of your competitors has released a new product or service offerings because of which your customers are switching over to your competitor you can not just sit idle and do nothing.
If we take a perspective from the US angle we see that with the democrat being elected in US, the Democrats are likely to increase unemployment benefits, which already are a disincentive to work. By going this logic people a certain percentage of people who have lost their jobs in this meltdown will choose unemployment to their benefit and would like to remain that way, even if opportunities are there. This situation will also boost outsourcing to little extent.
Therefore force of cost reduction coupled with the fierce competition will force all the organizations to adopt as a mandatory measure outsourcing. Sourcing like offshoreing is a commercial model of outsourcing as it moves the work at right sourced location using right skills at right locations. This would create a new wave of outsourcing. Finding a right kind od IT service provider may become difficult as the IT companies may also have issues supporting such a boom.
Not only that there will be a tremendous rise in demand for outsourcing but also as a golden rule of thumb we know that every crisis creates new opportunities and there are new possibilities will emerge in every segment. The outsourcing service provider firms will have the opportunities to build deeper, wider and long lasting relationships with existing customers by showing caring attitude with improvement in quality, reduction in cost, on time service delivery. Service provider would become more nimble to preserve profits of their customers. The current situation will also redefine assumptions about what can be outsourced.
I agree that demand of the outsourcing may push the prices up a bit but it will also create opportunities which will see many other service players emerge to latch on to these opportunities. This may also open opportunities for low cost south Asian countries to start operations.
Sunday, November 16, 2008
Parachute Oil
Marico industries in one of the largest FMCG company in India, offering a customized brands, catering to the needs of the target audience. Marico also has a very strong nation wide network, which makes the brands available for the customers. Ultimately, for a FMCG company ‘distribution’ is the core focus area. Marico is well known for its brand, Parachute coconut oil. Parachute is one among India 's Top 100 Most Trusted Brands and is the world's largest packaged Coconut Oil Brand.
Brand name: Parachute
Positioning: As a purity brand.
Target Audience: The primary target audience of ‘Parachute’ is women of all ages in both urban and rural population of India.
Pioneering idea: Parachute pioneered the idea of selling the coconut oil in plastic.
Communication: Mass communication on the platform of ‘caring’ with mother daughter theme.
Innovation strategy:
Marico followed innovation as a major strategy in building Parachute brand. The following are some example.
20 ml Parachute - a Rs 5 SKU that enables loose oil users to upgrade to Parachute.
Flip Top Cap for Parachute bottles to enhance the safety and protect the purity of Parachute
Parachute Mini - a bottle shaped small pack being sold at an MRP of Re. 1
Easy Jar of Parachute to facilitate usage especially during winters
The strategy followed by the company and the quality of the product offers a customized product in all seasons, to grab the price conscious customers and to provide value for money.
Other extensions are:
Brand name: Parachute Advanced refined hair oil and Parachute Jasmine
Target audience: Young and appearance conscious consumer.
Positioning: Focuses upon the fragrance aspect of the oil.
Brand name: Parachute After shower Hair Cream
Target audience: Young men (SEC A, B)
Positioning: Focuses upon stylish look, non sticky and nourishing aspect.
Brand name: Parachute Sampoorna
Target audience: Women customers
Positioning: Focus on providing strong hair.
Brand name: Parachute Natural shampoo
Positioning: On the platform of ‘Naturals’ which makes hair
Brand name: Parachute
Positioning: As a purity brand.
Target Audience: The primary target audience of ‘Parachute’ is women of all ages in both urban and rural population of India.
Pioneering idea: Parachute pioneered the idea of selling the coconut oil in plastic.
Communication: Mass communication on the platform of ‘caring’ with mother daughter theme.
Innovation strategy:
Marico followed innovation as a major strategy in building Parachute brand. The following are some example.
20 ml Parachute - a Rs 5 SKU that enables loose oil users to upgrade to Parachute.
Flip Top Cap for Parachute bottles to enhance the safety and protect the purity of Parachute
Parachute Mini - a bottle shaped small pack being sold at an MRP of Re. 1
Easy Jar of Parachute to facilitate usage especially during winters
The strategy followed by the company and the quality of the product offers a customized product in all seasons, to grab the price conscious customers and to provide value for money.
Other extensions are:
Brand name: Parachute Advanced refined hair oil and Parachute Jasmine
Target audience: Young and appearance conscious consumer.
Positioning: Focuses upon the fragrance aspect of the oil.
Brand name: Parachute After shower Hair Cream
Target audience: Young men (SEC A, B)
Positioning: Focuses upon stylish look, non sticky and nourishing aspect.
Brand name: Parachute Sampoorna
Target audience: Women customers
Positioning: Focus on providing strong hair.
Brand name: Parachute Natural shampoo
Positioning: On the platform of ‘Naturals’ which makes hair
Appy Fizz
You gotto be kidding if you don’t remember the fizz ParleAgro created with the launch of Appy Fizz created during its launch in June 2005. The target was clear –Gen Y and the positioning was abso clear- “A Cool Drink to Hang out with”.
The personality of the drink was a cool dude aged in late teens or early 20s and typically fun loving, pocky – just like that chilled out dude you hang out with. I briefly remember last year when I and a a friend of mine met this gentleman at Parle Agro (ahh one of those sponsorship-cold-visits for our college fest virtualities) and we asked him why Appy Fizz didn’t come in glass bottles. He said that the apples are original Kashmiri apples which are of top grade quality and the taste would be hampered if packaging wouldn’t be PET. Appy Fizz is available in SKUs of 300ml, 500ml and 1 litre PET bottles, priced at Rs18, Rs25 and Rs45 respectively. Ok Gotcha! So you have an array of variants in terms of sizes lined up. A slight putoff was the price tag it carried but it was a clear show of premium which all of us were ready to pay – afterall it was the ONLY fruit based fizz which was fun to drink and unlike the fantas and the mirindas. Ok I also gathered the fact in the meet that Appy Fizz initially faced a lot of problems from the MNC Brands while placing it at the multiplexes and youth zones! The sales team did a fabulous job though backed by the strong pull that brand created. Who can forget the amazing series of TVCs the brand had right!! Its all about the RE-CALL Effect, I still remember my engineering days when few people carried Appy Fizz bottles (refilled with drinking water) in colleges as a signature – “I’m cool”. And that induced others to buy the product. Yea packaging rocks man!
Now if we go by text books, product life cycle says that Appy Fizz would still in the end of the growth stage, the brand enjoys a decent brand pull. But maybe the craving for the brand has slightly passified, afterall the name fizz still has soda in it and the sudden buzz about the “oh-what-about-my-calories” effect is turning to people’s mentality. Right so what do we do @ Parle Agro! We have a new product launch (I’ll capture it soon) which was recently announced. Parle Agro is entering the 100 % juice market in a bid to take it head on with established brands like Dabur’s Real, PepsiCo’s Tropicana and Coca-Cola’s Minute Maid. Afterall the Indian juice and juice-based drinks market is standing at over Rs 1,200 crore with market growing at around 20 per cent YOY. In a recent press release, Nadia Chauhan, director, Parle Agro, told Business Standard that its premium apple drink, Appy Fizz, has been introduced in a new avatar. “Appy Fizz isn’t just a sparkling apple drink; as a brand it is representative of the youth. And the youth is all about constant change and experiments — with looks and style, with ideas and beliefs. Appy Fizz’s new look is in keeping with that kind of a mindset”.
Wow! In sync with the statement, check out the the latest commercial by Appy Fizz new avatar
The ad shows the bottle of Appy Fizz changing and surprising his buddies with the new avatar. ''We maintained the fun quotient Appy Fizz had in the previous campaigns but added a lot of style since it was going to be about the New Look'', says Sajan Raj Kurup, chairman and chief creative officer of Creativeland Asia, the agency that created the new packaging design and the communication. ''Bold, unrestrained, unabashed and cool that should sum up the look we have created for Appy Fizz. It pretty much mirrors the youth values today', he adds.
Speaking about the kind of detailing in the new packaging, Nadia Chauhan says, ''It's about engaging the consumer at the first point of contact and engineering the right kind of start to the relationship''. Yea if we talk about packaging, as the 5th P, Parle Agro has a history attached with itself. The company was a pioneer in introducing fruit drinks in Tetra Pak's in India, and the first to introduce fruit drinks in PET bottles in India – who can forget the “frooti” packs we all craved for as kids right!
Its called "DONATE YOUR ICE" where APPY FIZZ and his friends educate us about the funda thats gripping the world @ this point of time. But still it would be gr8 if they have a better gripper for the youth connect something like TATA TEA has come up with (see my previous post)
Disruptive Innovations!!!
Business strategy: Disruptive Innovation
Strategy: Disruptive innovationKey person: Clayton Christensen
This business strategy mainly focuses upon describing the impact of new technologies on a firm's existence. Clayton Christensen first coined the phrase "disruptive technologies" in 1997, in his book "The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail". A disruptive innovation is a successfully exploited product, service, or business model that significantly transforms the demands and needs of a mainstream market and disrupts its former key players,' says an article in Malaysia's Business Times (April 10). Digital and photocopying technologies are examples of disruptive innovations.
There are two types of Disruptive Innovations.
1. Creates a new market by targeting non-consumers.
2. Competing in the low end of an established market.
Even though Technology is still a key source of disruptive innovation, other important elements are concept of consumer value and business models which includes vertical integration, business processes
An example for the technology driven disruption is GM’s OnStar vehicle sensing and tracking system that uses a combined GPS / GSM technology bundle to pin-point vehicle location for roadside assistance. Aravind Eye Hospitals which pioneered the low cost cataract operations is a good business model disruption.
Some disadvantages of the disruptive innovations are, since the market is new and the company is addressing to the low end customers, achieving big profits may take long time. Understanding the needs of the customers, designing the innovative products and informing them about the brand may not be an easier task and it will also take huge investments.
Cavin Kare!!!
Cavin Kare was established in the year 1983, with an investment of Rs 15000. The company was started with a single product by an innovative entrepreneur C. K Ranganathan. In the initial period, the company was named as Chik India Ltd and it was renamed as CavinKare Pvt. Ltd (CKPL) in 1998. The reason behind the name is, Cavin means beauty in tamil and ‘care’ is spelt as Kare. The name is also a special one as it denotes the initials C and K of Mr. Ranganathan. The company offers quality Personal care (hair care, skin care, home care) and Food products. CavinKare has touched a turnover of over Rs 5000 million in 2006-2007. The Company has employee strength of 576 and has a network of 1300 Stockists catering to about 25 lakh outlets nationally.
Strategies used:
The main strategy of Cavin Kare is to strengthen the distribution and marketing. The company made its brand available to the customer through out the country. Continuous concentration upon Research and Development is an added advantage to the company which has dedicated staffs. Their main job is to understand the needs of the target audience and to bring more innovative products
Innovative marketing strategy used for Chik Shampoo:
“During 1999, the penetration level of Chik Shampoo was not aggressive. Hence the company went back to the consumer to understand their basic needs that would help Cvai Kare to drive the sales growth and gain good market share in the shampoo market. Cavin Kare also discovered that soap usage was the biggest barrier and people did not see the need for using Shampoo. As part of the consumer study, the company tried to convey the message to the consumer that soap usage was bad for the hair and when a product exists specifically for hair it should be used. The consumers responded by stating that their fathers and grandfathers have used only soap and their hair continued to maintain good health. So the argument that Soap was harmful did not bear merit to them. However they did agree that Shampoo usage gave soft and silky hair. However their perceived value on hair wash was very less and they did not want to spend more out of their pockets to buy Shampoo. The study also revealed that though the aspiration to use shampoo was there, the need to spend more did not appeal. To arrive at a solution for this situation, Cavin Kare introduced the 50 Paise shampoo sachet, which easily satisfied a single wash. It was a calculated risk took, since the existing volumes of 1 rupee shampoo sachets was also in the market but when sales started picking up for the 50 paise shampoo, the 1 Rupee Shampoo also picked up pace once the consumer started making a habit of using Chik shampoo and Cavin Kare gained a good margin.
Another situation where innovation was required was the economy value consumers saw between using shampoo sachets and shampoo bottles. 65-70% of the shampoo sold in India is through sachets and only 30% is through bottles. Sachet sells more due to the phenomenal value it offers to the consumer.
As explained by Mr. C.K Ranganathan…..
“Let us assume 7ml of Shampoo in a Sachet is sold at Rs.2 and a 100 ml bottle of the same brand of Shampoo is sold at Rs.55. When a consumer buys 14 Sachets and stores them in a bottle, it would make 98 ml. The consumer would invest about Rs.28, which is roughly half the price as that of the bottle. Sachet thus offers high level of economy and also every use is measured. So to offer the consumer value for money we came up with the concept that bottles will be cheaper than the sachets. We had to be innovative and economize on the cost of bottle, packaging and other things and came out with a 50 ml bottle of Chik for Rs.6 with 2ml more in the bottle when costs are compared. This move resulted in a huge volume of sales and helped the growth of Chik from 5% market share to the current value of 21%. So this exercise revealed to us that the consumer would buy a product if he sees enough value for money.”
Strategies used:
The main strategy of Cavin Kare is to strengthen the distribution and marketing. The company made its brand available to the customer through out the country. Continuous concentration upon Research and Development is an added advantage to the company which has dedicated staffs. Their main job is to understand the needs of the target audience and to bring more innovative products
Innovative marketing strategy used for Chik Shampoo:
“During 1999, the penetration level of Chik Shampoo was not aggressive. Hence the company went back to the consumer to understand their basic needs that would help Cvai Kare to drive the sales growth and gain good market share in the shampoo market. Cavin Kare also discovered that soap usage was the biggest barrier and people did not see the need for using Shampoo. As part of the consumer study, the company tried to convey the message to the consumer that soap usage was bad for the hair and when a product exists specifically for hair it should be used. The consumers responded by stating that their fathers and grandfathers have used only soap and their hair continued to maintain good health. So the argument that Soap was harmful did not bear merit to them. However they did agree that Shampoo usage gave soft and silky hair. However their perceived value on hair wash was very less and they did not want to spend more out of their pockets to buy Shampoo. The study also revealed that though the aspiration to use shampoo was there, the need to spend more did not appeal. To arrive at a solution for this situation, Cavin Kare introduced the 50 Paise shampoo sachet, which easily satisfied a single wash. It was a calculated risk took, since the existing volumes of 1 rupee shampoo sachets was also in the market but when sales started picking up for the 50 paise shampoo, the 1 Rupee Shampoo also picked up pace once the consumer started making a habit of using Chik shampoo and Cavin Kare gained a good margin.
Another situation where innovation was required was the economy value consumers saw between using shampoo sachets and shampoo bottles. 65-70% of the shampoo sold in India is through sachets and only 30% is through bottles. Sachet sells more due to the phenomenal value it offers to the consumer.
As explained by Mr. C.K Ranganathan…..
“Let us assume 7ml of Shampoo in a Sachet is sold at Rs.2 and a 100 ml bottle of the same brand of Shampoo is sold at Rs.55. When a consumer buys 14 Sachets and stores them in a bottle, it would make 98 ml. The consumer would invest about Rs.28, which is roughly half the price as that of the bottle. Sachet thus offers high level of economy and also every use is measured. So to offer the consumer value for money we came up with the concept that bottles will be cheaper than the sachets. We had to be innovative and economize on the cost of bottle, packaging and other things and came out with a 50 ml bottle of Chik for Rs.6 with 2ml more in the bottle when costs are compared. This move resulted in a huge volume of sales and helped the growth of Chik from 5% market share to the current value of 21%. So this exercise revealed to us that the consumer would buy a product if he sees enough value for money.”
TITAN
Titan Watches, country's leading watch manufacturer, launched its all-new collection of chronograph, multifunction and retrograde watch "Octane" sometime in February this year. Speaking after the
launch, Titan Watches COO Harish Bhat told newspersons that this new product was a bold and unique collection that embodies speed, energy and power. "Titan has always looked to bring in the best to its customers. The new Octane is a reiteration of the company's promise to constantly provide the customer products that connect to their personalities and help them express themselves", he added. The leading watchmaker is aiming to grow its watch sales by 40 per cent with the launch of its new watch collection.
Further during its February 2008 launch Bhat said, “Octane meets different aspiration levels of a male customer of Titan. Built with rugged, stylish features, Octane will catch the imagination of today’s bold and adventurous urban male.”
Octane has been designed by a mix of Titan’s in-house designers and contract designers at their Hong Kong office. For the time being Octane is manufactured in Hong Kong for the Indian markets. Depending on the sales volume, it will be made in India at a later stage, he said adding it will be launched in other global markets after six months.
The Octane collection is available in 35 styles and priced between Rs 5,000 and Rs 7,500. No Doubts to the reasoning why the company spent a whooping press and outdoor advertisement campaign for the new watch at a budget of Rs 3.5 crore.
Ok so you know about the ambitious dreams of the company. If you have seen the pulse raising TVC (here) by Octane you must know what I’m talking of. Now I won’t blame you if you thought that the ad was for a new bike launch atleast for the first 15 sec. Later, this eye catcher, which has an amazing soundtrack “BLUR” shows the biker flaunting the OCTANCE series. For the 60 sec TVC created by OnM, Bangalore the appeal shouts from the rooftop!
Lets consider the personality of the brand they are trying to portray here. Now what exactly is a brand personality? Our professor once told us, Brand personality is distinct, non preemptible enduring and associates the brand with certain values. Brand personality acts a potent brand
differentiator and offers sustainable competitive advantage. Advertising is one of the key elements in building a brand personality, which is equally important to the marketer & consumers and this
one shows just that.
First things first, if we attempt to find the Target segment,
Geographically: the Class-1, Class-2 and metros.
Demography : Ages 25-35 segment, young-single or young married males.
Income : upper middle class.
Occupation: Junior/mid level executives who are professionally qualified.
My favourite would be the psychographic segmentation, the segment they are targeting are the Experiencers who Mr. Kotler says are the young, enthusiastic, impulsive people who seek variety and excitement. Spend a comparatively high portion of income on fashion and entertainment and socializing. Behavioural segmentation which is a bit complicated but heres an attempt:- Decision roles – ok now lets get real Its Diwali time, you need an initiator (either ur GF or wife or friend) to initiate the need for a watch. She would partly play an influencer but the decider and buyer is the final user since OCTANE has 35 designs. Behaviourally it is an occasional (generally festivals or birthdays) purchase. Loyalty status is somewhere between Hardcore loyal and split loyal. Attitude toward the product is purely Positive since it comes from a heavyweight brand.
As the BLUR soundtrack fades, for those last 8-10 seconds if you closely try to hear, you have the same TITAN track in the rock version (wow...sticking to the core corporate identity) and the voice over says BE SPEED...BE MORE, a sudden rush goes through you and says “Hey yaa man...thats what I wanna be like.” In this fast paced “blur” life, all I need is speed. To add to it the positioning is straight -> “I am no ordinary watch...You want speed, you want a fast life...Here I am to be with you, in each adventure you head to. Rugged in looks, contemporary style and features and what more, the watch is not too informal either so you can hold me on your wrist even when you are in a meeting”. There has to be thumbs up by the metrosexual man.
Also what I like is this price point, Rs.5000-7500 a quality watch was somewhere missing. We have TIMEX, Fast Track and others which are below this range but even the mere look isn’t that of a rugged kind. They are more casual though trendy; you know the college going types. This watch should be a hit amongst the 25-35 segment. And as the positioning of TITAN in the 1980s was as a gift or accessory and not as a watch, I think
the same would continue here. Noteworthy fact is the screening of the commercials, bang
before Eid and Hindu festivals like Dassehra and Diwali. And trust me in this season wherever you go, you have a discount or exchange offer hanging on the doors. So it should boost the sales of OCTANE. The most famous models even featured on the website are PULSAR and ADRENO. Hell yea, even the names sound like bikes.
Saffola Campaign
Ok,talk about being CLOSER to the consumer... n we have the best of the brands now not only vying for a place in the mindspace of the consumer but also his/her HEART..
Who knows it better than SAFFOLA? Check the new campaign of SAFFOLA here
Started in late 80s by MARICO, India's leading FMCG co with power brands like Parachute, Saffola, Sweekar, Marico's Hair & Care, Revive and Sil.
If we talk of Saffola, they caught the right eye of the consumer- sometime in 2000,
Mr Mariwala was in Delhi for a press conference to announce Saffola's support to the `World Health Week' through the Saffola Healthy Heart Foundation. To further build on Saffola's `heart equity', a Web site called goodforheart.com, set up on an investme nt of Rs 30 lakh, was on air!
Marico also proposed to support the cause of preventive heart care by airing a series of infomercials on select television channels. Other similar attempts would be tapping high stress groups of individuals through direct mailers. The World Heath Day, organised by the WHO in September end, is observed across 28 countries. In India, it is being supported by Saffola Healthy Heart Foundation, in conjunction with the All-India Heart Foundation and the Cardiological Society of India.
So, we are in 2008 and Saffola has a host of products!
Lets look at the Product mix of Saffola.
In 1999 , oil prices were low so the brands showed de-growth in value terms. The company enterd the basic foods segment in 1999 with the launch of Saffola mineral enriched salt and Saffola Atta. These products were rightly positioned under the health platform . "There was a need in the marketplace for such a product which cannot be directly compared to other branded salts because of the price premium that Saffola salt commands," says Marico Industries Ltd chief executive officer (health care) Pranab Datta.
Then in 2004,'Saffola' launched a fresh advertising campaign. The campaign by Grey Worldwide has a new tagline, "Aaj se jeene ka andaaz sudhariye" (Improve your lifestyle today), urges every Indian to take up healthy lifestyle. Earlier Saffola campaign used the tag line - "Saffola Swasth ParivaarKe Dil Ki Dhadkan".Saffola has smartly leveraged its equity of edible oils to the extensions like Atta Mix and Salt!
I realised something while doing my summer project on Ready to Eat products with MTR Foods Ltd. Just sharing my view on the 'metro-health' factor. Now what is it with health that we have- aren't we still running behind the samosas or new age offerings-pizzas,pastas et' al' Its more to do with the 'EI' thats the emotional intellect!
Imagine a typical corporate exec , age mid 30s. He/She gets up as early as 7 in the morning, maybe pays the treadmill a visit thrice a week. A quick munch of corn flakes, a glass of orange juice n bingo...m done for my breakfast. Then runs to the office wher the actaul stress bust starts...The umteen cupsa coffee, the 'working-lunch' and the (ahem) fags that go along with it.
So your 'health' goes for a total toss and you know it! So when products like Saffola come to the shelf in the mall-nex-door, you feel that "Hey..m not too much in love with my health either...y not just grab this stuff n give justice to my health?"
Now THIS factor is what is the emotional benefit of the offerings that base on health platform. The functional benefits are all the same. Its just that the constant ads about self-probing health issues and the "fright" of the future that compels one to buy the product!Something like THIS
Come to think of it from a working woman's (or housewife's) aspect. She (maybe) is too busy to take care of her family the way her mother did! So when she knows abt the 'health' factor associated with the products, she feels that "YES,it makes me a better homemaker" if I buy THIS for my family.Something like THIS
And rightly so, kudos to the Saffola campaign.If you check out their website, it gives u a total,one stop guide with a RISK CALCULATOR.If u visit it earlier than 28th Sep, you also could register for the FREE CHOLESTEROL TEST.
PS:The only problem is SUNDROP is running a similar track..just make sure the potential product doesnt take shape of an augmented product
Who knows it better than SAFFOLA? Check the new campaign of SAFFOLA here
Started in late 80s by MARICO, India's leading FMCG co with power brands like Parachute, Saffola, Sweekar, Marico's Hair & Care, Revive and Sil.
If we talk of Saffola, they caught the right eye of the consumer- sometime in 2000,
Mr Mariwala was in Delhi for a press conference to announce Saffola's support to the `World Health Week' through the Saffola Healthy Heart Foundation. To further build on Saffola's `heart equity', a Web site called goodforheart.com, set up on an investme nt of Rs 30 lakh, was on air!
Marico also proposed to support the cause of preventive heart care by airing a series of infomercials on select television channels. Other similar attempts would be tapping high stress groups of individuals through direct mailers. The World Heath Day, organised by the WHO in September end, is observed across 28 countries. In India, it is being supported by Saffola Healthy Heart Foundation, in conjunction with the All-India Heart Foundation and the Cardiological Society of India.
So, we are in 2008 and Saffola has a host of products!
Lets look at the Product mix of Saffola.
In 1999 , oil prices were low so the brands showed de-growth in value terms. The company enterd the basic foods segment in 1999 with the launch of Saffola mineral enriched salt and Saffola Atta. These products were rightly positioned under the health platform . "There was a need in the marketplace for such a product which cannot be directly compared to other branded salts because of the price premium that Saffola salt commands," says Marico Industries Ltd chief executive officer (health care) Pranab Datta.
Then in 2004,'Saffola' launched a fresh advertising campaign. The campaign by Grey Worldwide has a new tagline, "Aaj se jeene ka andaaz sudhariye" (Improve your lifestyle today), urges every Indian to take up healthy lifestyle. Earlier Saffola campaign used the tag line - "Saffola Swasth ParivaarKe Dil Ki Dhadkan".Saffola has smartly leveraged its equity of edible oils to the extensions like Atta Mix and Salt!
I realised something while doing my summer project on Ready to Eat products with MTR Foods Ltd. Just sharing my view on the 'metro-health' factor. Now what is it with health that we have- aren't we still running behind the samosas or new age offerings-pizzas,pastas et' al' Its more to do with the 'EI' thats the emotional intellect!
Imagine a typical corporate exec , age mid 30s. He/She gets up as early as 7 in the morning, maybe pays the treadmill a visit thrice a week. A quick munch of corn flakes, a glass of orange juice n bingo...m done for my breakfast. Then runs to the office wher the actaul stress bust starts...The umteen cupsa coffee, the 'working-lunch' and the (ahem) fags that go along with it.
So your 'health' goes for a total toss and you know it! So when products like Saffola come to the shelf in the mall-nex-door, you feel that "Hey..m not too much in love with my health either...y not just grab this stuff n give justice to my health?"
Now THIS factor is what is the emotional benefit of the offerings that base on health platform. The functional benefits are all the same. Its just that the constant ads about self-probing health issues and the "fright" of the future that compels one to buy the product!Something like THIS
Come to think of it from a working woman's (or housewife's) aspect. She (maybe) is too busy to take care of her family the way her mother did! So when she knows abt the 'health' factor associated with the products, she feels that "YES,it makes me a better homemaker" if I buy THIS for my family.Something like THIS
And rightly so, kudos to the Saffola campaign.If you check out their website, it gives u a total,one stop guide with a RISK CALCULATOR.If u visit it earlier than 28th Sep, you also could register for the FREE CHOLESTEROL TEST.
PS:The only problem is SUNDROP is running a similar track..just make sure the potential product doesnt take shape of an augmented product
TATA TEA !!! CAMPAIGN
TATA TEA...JAAGO RE CAMPAIGN !!
Well a few months back, TATA TEA flodded the commercial of JAAGO RE, a catchy bold statement which said "HAR SUBAH UTHO MATT.JAAGO RE!!"Wow!!So we get this stir in our souls when u see the guy outsmarting the politician who has a cuppa tea with him when he comes to ask for vote!
For a moment you might just feel the itch to do something similar...to a prof who is lousy in campus, to that oversmart nerd who has to know everything on earth...or even the gal-nex door who thinks no end to herself.
Bang then, thats what the ad has to do!Apply the STP funda here, "we" are the segment TATA Tea is targeting- the ones who have the guts to stand up and VOICE our opinions. So you get into the positioning of TATA TEA and u say "Har Subah Sirf Utho Mat, Jaago Re!" So its talks about the awakening of the minds each morning to do something bold.Smart...now for all of us young marketeers, heres how you leverage on ur gaining popularity and build ur brand awareness.
Tata Tea, India’s largest volume tea company announced a new chapter in its evolution by unfolding an innovative positioning and presentation of its largest tea brand – Tata Tea.
Jaago Re, the new campaign, will kick start across the country on October 1, 2007. The new campaign leverages the unique position that tea enjoys in our culture and attempts to migrate tea from being a physical and emotional revitaliser to becoming a catalyst for ‘social awakening’.
Its the doers age today and not the speakers or sulkers! Hence what TATA TEA sends is a msg that we need to VOTE...to voice our opinions...check out the TVC here which is on air and provokes the youth-junta to vote.TATA TEA TVC
This campaign will clearly establish thought leadership for the brand to go along with its market leadership.
The four Tata Tea brands – Tata Tea Premium (largest selling tea brand in India), Tata Tea Gold, Tata Tea Agni and Tata Tea Life – currently are advertised and positioned uniquely. These four brands have now been bought together under one umbrella brand- Tata Tea. This consolidation and unification of the four brands is aimed at communicating to the consumer a single, unified message in terms of emotional connect.
Speaking about the re-staging of the brand, Mr. Percy Siganporia, Managing Director, Tata Tea Limited, said, “ We are charting a course to be India’s foremost tea based beverage company and a key mission towards achieving such leadership is to establish Tata Tea market and thought leadership for branded tea in India. We are building market volume leadership and are tasking achievement of market value leadership. As a category leader Tata Tea believes its youth oriented market and operational focus will emotively connect with issues that drive the heart, mind and soul of India’s emerging social consciousness. Tata Tea will lead category thought and widen the scope of the current universal appeal of tea based beverages.”
Explaining the rationale behind the new campaign, Ms. Sangeeta Talwar, Executive Director - Marketing, Tata Tea Limited, said, “In India tea is much more than just a beverage, it is indeed a way of life. It is so deeply embedded in our psyche, in our roots, and our culture that we cannot imagine life without a cup of steaming hot tea. The new campaign will migrate Tata Tea from being a physically and emotionally revitalizing tea experience to one that will challenge the consumer’s intellect to “awaken” to what is around them. It will motivate people to internalize the tea experience and externalize their social awakening. It is probably the first time that any brand is taking on the mantle of social responsibility in such a manner. The campaign will also provide a poignant platform for connection with the youth.”
The campaign in keeping with the meganess of the strategy also plans to deploy a mega approach to connect with the consumer at all possible touch points. Television will be the lynchpin of the campaign. There will be one main commercial and six short duration commercials. Each of the commercials will touch upon one relevant social issue. As part of the campaign Tata Tea brand has also tied up with the Jaago India foundation. The foundation and Tata Tea have launched a website that each month will cover a socially relevant issue. The site will provide all the required information on the issue, will allow consumers to interact and provide solutions. To generate interest and create empathy the site will feature four short film on the topic of the month. Other than television and the website the campaign will also use radio, press, shop level visibility and the new outdoor medium of malls and multiplexes to drive home the message of Jaago Re. Many of the communication tools being planned at the malls and multiplexes will be used for the first time in the country.
Thursday, November 13, 2008
opic of Building brands at low cost. It will be great if anyone can share any ideas.
opic of Building brands at low cost. It will be great if anyone can share any ideas.
Hey I think there are a few factors you should be looking at
As you work to build your brand, you are probably asking yourself questions such as:
* What are we trying to achieve?
* Who should be involved in branding activities?
* How do we manage this?
* What are the tools and techniques to use?
* How do we know we're making progress?
What i feel is
Creating a strong brand identity will build mind share — one of the strongest competitive advantages imaginable. As a result, customers will think of your business first when they think of your product category. For example, when you think of tissues, more likely than not, you think of the Kleenex brand. And when you're looking for tape to wrap a present, Scotch is the brand that springs to mind. Likewise, when your child wants a hamburger, he will often say he wants to go to McDonald's. The reason behind these strong brand-product associations is that these companies have built rock solid brand identities.
"A brand is the one thing that you can own that nobody can take away from you," says Howard Kosgrove, vice principal of marketing at Lindsay, Stone and Briggs Advertising in Madison, Wis. "Everything else, they can steal. They can steal your trade secrets. Eventually, your patents will expire. Your physical plant will wear out. Technology will change. But your brand can go on and live. It creates a lasting value above and beyond all the other elements of your business."
NOW IN YOUR CASE
Look at the mantras of branding !!!
Today i feel you need to emotionally connect with your TG
Chik shampoo is a brilliant example of the same...once you zero in on your TG
Try understand their behavior buying patterns what do they generally do when they are free
Do they read News papers or are they glued to the Idiot box whats generally on their mind ...what motivates them to buy your product
If your TG is rural markets then
Road shows is the way to go!!!
you know the thing is you need to optimize your media mix for eg
if I am a low cost shampoo.. i cant show a shahrukh khan using it BUT
I can show my advertisement during a shahrukh khan movie which would be very Helpful!!!
things like that
In short to sum up
1. Relevance to a customer's lifestyle - The more apparent the connection is between the brand and the prospect's daily activities, the greater the chances are that the prospect will buy that product. Relevance, or the connection that the prospect has to the brand identity, is how customers ultimately decide which brands to buy and which they will discard.
Ask yourself: Is the identity of the brand too young for my target market? Is it too old? Is it too upscale?
2. Promises backed by support - Benefits need to be backed with some sort of persuasive reason to believe the product's hype. Many times, products or services have some formula or patent that is "unique" from all the other brands out there. Why do we trust Pantene shampoo, for instance? Because we believe in the brand's "revolutionary" Pro-V formula that leaves hairs strong and healthy. Why do we believe Secret antiperspirant will keep women smelling sweet? Because "it's pH balanced for a woman, and not a man."
Ask yourself: What promises are you making about your brand? Can my products or services follow through on those promises?
3. Message of the brand Is clear and focused - No matter how brilliant a strategy you have, you need to be clear about the message. Some examples of crystal clear campaigns include "Gillette - The Best a Man Can Get" or "Choosy Moms Choose Jif."
Ask yourself: Are my messages in line with what I want to convey about my products and services? Are there messages that can be misconstrued? If so, how can I change them to be more accurate?
4. Message of the brand Is appropriate - Have you ever seen a commercial on TV that seems to come from left field? It grabbed your attention, but told you nothing about the product or service, and it seemed inappropriate for what is being sold. For instance, financial institutions can't effectively work humor into their ads because the preconceived notion is that banks are not supposed to be fun or entertaining. The message that you send needs to be appropriate to the product or service you are trying to brand.
Ask yourself: Are my advertising messages in line with the image I'm trying to convey about my company, products and services? If not, could they be hurting, rather than helping, the brand?
Please feel free to contact me ... i wud love sharing my views with u
My email id is
anurodhsharma@gmail.com
09819409619
Thursday, October 2, 2008
ranga on first generation Entrepreneurs
Challenges faced by a First Generation Entrepreneur
C K Ranganathan,(Ranga) Chairman and Managing Director, CavinKare
Ranganathan set up Cavin Kare in 1983. Under his leadership, Cavin Kare has grown from being a marketer of a single product – shampoo - to one offering consumers a range of hair care, skin care, and personal care products as well as packaging solutions, with a sales turnover of about Rs 3.50 billion. Smart marketing and clear product positioning have been the firm’s sources of strength, and these attributes have been instrumental in driving its growth. . The firm currently markets over 15 products in the hair care, skin care, and personal care segments.
Ranga said that the first generation entrepreneur requires belief, passion, the will to succeed and the hunger to grow. He began with a description of his struggles during the early days of Cavin Kare, which started operations as a manufacturer and marketer of shampoos. He was particularly handicapped as he had chosen to part ways with an established family business, had little experience in the manufacture of shampoos, limited amount of money, and only a moderate education. His strong will to succeed, however, helped him overcome these handicaps.
Ranga realised early that the firm could differentiate its products from those of its competitors only if it challenged existing norms and established new rules of the game, thereby creating a competitive advantage for itself. He identified product design and development, and marketing as keys to success in the FMCG business and therefore decided to outsource manufacturing, a strategy that continues till date. To ensure quality supplies, a strict quality assurance programme was instituted. Suppliers are rewarded by being paid ahead of due dates.
An interesting aspect of its product offerings is that its products span both ends of the price spectrum, ranging from the very low priced 50 paisa shampoo sachet to products priced higher than erstwhile market leaders. CavinKare has now integrated backwards, setting up associate firms that manage its advertising, media buying, product packaging, and R&D activities. It has also commenced marketing of pickles in sachets.
Summing up, he said that his success was driven by his belief that he was the master of his own fate. He exhorted students to seek out opportunities to create wealth and go ahead fearlessly. He called stretching beyond existing resources the hallmark of an entrepreneur and hoped that the efforts of the EVC Club and the WCED will help foster a spirit of entrepreneurship among students.
4 A's of rural marketing
4 A's of rural marketing
Adaptability
Availability
Affordability
Acceptability
Adaptability
Availability
Affordability
Acceptability
- Commitment from the top management: This must be total and management must realize that it is long haul and an investment into the future, otherwise RM will not give long term results. He sites HLL and ITC examples.
- Getting a dedicated task force: Rajan says that RM requires a dedicated mindset which many urban oriented MBA's don't possess. He suggest hiring of the RM team from students from RM institutes like IIRM or students with fire in their belly about RM from second level institutes, those who have taken RM as an elective course. He also advocates treating and paying such employees well and giving them an indication of their career graphs in the company. He reverts to an old saying - You pay peanuts, you get monkeys.
- Setting Clear Objectives: It is important to clearly define, in the early stages, the goals for the RM initiative and whether the initiative is a tactical effort to achieve increased sales in specific areas during specific time or build strong equity for the brand in Rural India.
- Understanding the Mindset of Consumers: Understanding of the mindset of the rural customer is important for the rural specialist to come up with a customized plan of action. The Rural market is heterogeneous with traditions and cultures that vary from state to state, even region to region in some cases. Most companies equate their findings from studies based on urban India to the rural segment and initiate a strategy based on this. Rajan says that his experience shows that the attitudes, fears, expectations, aspirations, comprehensions of rural customers to products and brands are different from urban customers. Advantages of such research are manifold because they give valuable ideas for new product development to suit the market - (a case in point a refrigerator with a twelve hour battery backup to take care of the power outages in rural areas), or new methods of physically reaching out to rural folks, along with insights into the right communications strategy and delivery (media) strategy
- Ensuring availability: In most cases, distribution is one of the biggest nightmares; the task of reaching products to 600,000 plus villages is a challenge. TVC's have raised the aspirations of the rural customer and makes him demand the product from the local shopkeeper, who then buys the required quantity from the nearest feeder, markets that he visits regularly for his supplies. Hence feeder markets such as towns and villages having populations of 10,000 to 15,000 initially must be provided for to start the first steps towards RM
- Evolving a Comprehensive strategy: A comprehensive strategy involving multimedia (including mass media, where necessary) has better results as compared to those one-off projects with limited goals.
- Involve the Region: RM is a highly regional subject, with a company's regional teams being specialists in their respective regions. Involving them from the word go to ensure ownership of the campaign by the region, and also getting their insights and inputs in the development implementation of the campaign is essential
- Developing full proof plan implementation: Conducting a pilot in one taluk in one district of a state to gain insights from it, before a national roll out of a rural campaign is not realistic. To get meaningful results, both in terms of impact and sales, the pilot must cover at least as few districts' of the state, if not the whole state. The implementation plan must be as comprehensive as possible to ensure that all the elements to be checked out are included in the plan. Implementation of any rural campaign requires meticulous ground level planning and a thorough briefing and training of the field level people before execution. Sufficient time must be given to the agency to check out all the elements, before getting into the field
- Provide adequate budget: A decent budget could be spelt out by a rural specialist, depending on the task and the region. If the budget is limited, it should not be spread thin by trying to look at too many markets. If a company feels that it has a bright future in rural markets or would like to target the rural markets, then it is better to invest today so that the early mover advantage is gained to reap rich rewards in the future. But miracles should not be expected overnight, neither should hope be lost
- Evaluating the Results: The three areas that should be studied to understand that impact of a Rural campaign, according to Rajan are: Brand awareness, Brand Conversion, Increase in sales
Shampoos
Shampoos: Putting money where the lather is
Aarati Krishnan
AT A time when most FMCG (fast moving consumer goods) categories are inching along, personal products are being seen as the harbinger of prosperity. And hair care products is the fastest-growing category within personal products.
Between 1994 and 1998, the market size of products such as skincare and toothbrushes doubled in value. But the size of the shampoo market expanded two-and-a-half times over the same period. Not surprisingly, shampoos is a high priority area for major players such as Hindustan Lever. The current size of the shampoo market, according to ORG-MARG, is Rs 850 crore -- equivalent to 30,000 tonnes in volume terms.
Unlike other FMCG categories such as soaps and detergents, which boast of a penetration level of more than 90 per cent, shampoos remain a low penetration category. Industry sources estimate that the urban market penetration of shampoos is a modest 36 per cent. Shampoo usage in the rural markets is even more infrequent, with a penetration level of 12 per cent. Thus, even for the largest player in this industry, there is considerable scope for volume expansion by converting non-users.
Few players, HLL dominates
For a market with high potential, the shampoo market in India is dominated by just a few players. From scores of brands five years ago, the shampoo market has now been whittled down to a handful. Hindustan Lever (HLL), with a 65 per cent volume share (68 per cent share by value), dominates the market with brands such as Sunsilk, Clinic Plus and Clinic All Clear. Cavin Kare Limited, an unlisted company from Chennai, with brands such as Chik and Nyle follows with a 19.8 per cent volume share.
Procter & Gamble (P&G) is the only other large player in this category with brands such as Pantene Pro-V and Head & Shoulders. P&G discontinued its shampoo manufacturing operations in India in 2000. Most of its brands are today directly imported from other Asian countries such as Thailand, Taiwan and Vietnam.
New entrants are probably discouraged by the formidable task of establishing a distribution network from scratch. HLL's long established ties with retailers and its extensive distribution reach probably acts as an entry barrier for new entrants.
Cavin Kare Limited, which has managed to garner a significant share of the shampoo market despite this handicap, has focussed on scaled-down versions of its brands and herbal shampoos -- two segments where the market leader did not have a presence. Cavin Kare's shampoo business has grown faster than the overall market, at 20 per cent in 1998, 4 per cent in 1999 and 34 per cent over the past four quarters.
A blip in growth rates
Despite its undisputed potential, the rapid expansion of the shampoo market was interrupted in 1999. Overall growth rates in the market slowed to 1.7 per cent in 1999, from 16 per cent the previous year. Between January and November 2000, however, the market appears to have recovered some, and the shampoo category has grown by around 10 per cent.
The reasons for the slowdown? ``Lack of innovation'', says Mr D. Shivakumar, General Manager Marketing, Personal Products, Hindustan Lever. The company has identified three major barriers to shampoo use in India -- the perception that shampoos contain harsh chemicals that could damage hair, high price and the view that the shampoo is more of a glamour product rather than a hygiene product.
``We like to see it this way. Though we have a 69 per cent share of the shampoo market, we have just 10 per cent of the hair wash occasions in the country. We will work at getting consumers to switch over from alternatives, such as natural products and soaps, to shampoos'', says Mr Shivakumar.
His counterpart in Cavin Kare attributes the slowdown in growth rates to the contraction of agricultural incomes. ``The rural markets have slowed down due to the two consecutive disastrous monsoons'', says Mr Nandakumar, President, Marketing and Sales, Cavin Care. This does seem a plausible explanation. Roughly a fourth of the shampoo market is in rural India. But the rural market is the key driver for sachets, which make up 70 per cent of the total shampoo sales. HLL has higher stakes in the rural market with an 80 per cent share.
Scaled down versions
Therefore, the strategies of the major players have revolved around attacking these barriers to usage. The players obviously believe that the key obstacle to recruiting new users lies in the high price of shampoos as a product. Unlike other FMCG categories, where marketers are experimenting with low unit packs, as a concept, the low unit shampoo packs have been around for over a decade. Therefore, marketers have been working at scaling down prices further.
Cavin Kare made the first such attempt last year. It introduced a smaller 50 paise sachet of Chik, when most other sachets retailed at Rs 2. The effort appears to have been an unqualified success, with the Chik brand expanding by 40 per cent after the launch. A new 50 ml bottle of Chik priced at Rs 6 (when most other brands were available in 100 ml bottles and above) has also helped expanded the brand.
HLL acknowledges that the Chik innovations have expanded the overall market, trimming HLL's volume shares by 2-3 percentage points. ``Cavin Kare has expanded the market itself. Though our volume shares are down, our brands have not lost volume. They continue to sustain their earlier growth rates,'' says Mr Shivakumar.
HLL has responded with its own 50 paise version of Lux shampoo. The company claims the recently launched 30 ml bubble pack for Clinic Plus (Rs 8), is an innovative and cost-effective alternative for sachet users. While sachets are difficult to store and re-use, the bubble pack allows the user to extract just the right quantity for a single wash.
The scaled down versions could help pep up volume growth rates for major players. But they have also had the effect of lowering the per ml cost of the major brands retailed through sachets. Till the time the players upgrade users to the larger pack sizes, the sachet revolution could restrict margin expansion for the players.
Functional benefits
Players have also tried other routes to expand the shampoo market. Fighting the perception that shampoos are essentially glamour products, marketers have tried to add a utility value to shampoos by offering functional benefits. Anti-dandruff shampoos represent this attempt. Clinic Plus, one of the first anti-dandruff brands, is the largest shampoo brand today, with a market share of 31 per cent.
Clinic All Clear, an anti-dandruff extension targeted at the youth has also managed to garner a 13 per cent share. Due to its low pricing (Rs 71 for a 160 ml bottle against Rs 68 for a 100 ml bottle of Head & Shoulders anti-dandruff shampoo), the brand also has a significant rural market share of 44 per cent.
HLL has also experimented with different versions of Sunsilk for dry, normal and oily hair. Procter & Gamble's Head & Shoulders Menthol and Pantene Lively Clean also offer functional benefits to users. Since these add-ons enable brands to command a price premium over the plain shampoos, this strategy could aid both volume and margin expansion.
Herbal opportunity
One of the key barriers to shampoo usage lies in the reluctance to use a synthetic product on hair. Worldwide, therefore, herbal shampoos or botanicals, are a fast growing category. Ayur from RDM Traders Private Limited and Nyle Herbal, a herbal shampoo launched by Cavin Kare, have been some of the early entrants in the Indian herbal shampoos market.
These products claim to use traditional Indian herbs such as shikakai, soap nuts and amla as ingredients and have been a success. Nyle Herbal is among the top five shampoo brands in the country and herbal shampoos today account for 10 per cent of the market size.
That industry leader, Hindustan Lever, does not as yet have a presence in this segment is noteworthy. ``We do not have immediate plans to enter this category. Today, brands are expensive assets, requiring continuous investment. Creating a new brand from scratch would be quite undesirable in these circumstances'', feels HLL's Mr Shivakumar. However, brands such as Sunsilk have been emphasising natural ingredients such as `fruitamins'.
However, high price could be a key barrier when it comes to herbal shampoos. The key challenge in manufacturing herbals lies in efficacy. Users typically require larger quantities or higher concentrations of herbal shampoos to replicate the results of synthetic shampoos. Bringing down prices can therefore be quite difficult in this case. This is probably why 90 per cent of the herbal shampoos still sells only in the urban markets.
Moving across category barriers
Meanwhile, the value-added shampoo segment is getting quite crowded, with a range of pharmaceutical and cosmetics companies launching specialised products. While Dabur has leveraged Vatika's brand equity to launch Vatika Herbal shampoo, Godrej Soaps has leveraged its dominance of the hair colour market to launch Godrej Colourgloss shampoo, for users with coloured hair. This apart, several pharma companies (including Johnson & Johnson) have launched medicated anti-dandruff shampoos (which will probably carry higher credibility with buyers), while cosmetic companies such as Biotique and Lotus Herbals also have herbal shampoos on the shelves.
Cavin kare
C K Ranganathan, chairman and managing director of�CavinKare, has shown the world it is possible to beat the multinationals even in the most difficult market of fast moving consumer goods.
Ranganathan's journey, which started from a�small town�of Cuddalore in Tamil Nadu, has been an amazing one.�A business which he started with only�with Rs 15,000�is now worth Rs 500 crore (Rs 5 billion).
He learnt the first entrepreneurial lessons from his father, Chinni Krishnan, who�started a small-scale pharmaceutical packaging unit,�before moving on to manufacture pharmaceutical products and cosmetics.
In an interview with rediff.com,�the CavinKare chief speaks about his inspiring journey.
His father,�his inspiration
My father, Chinni Krishnan, an agriculturist, was also into pharmaceutical business. As I was poor in academics, he wanted me to either do agriculture or start a business.
My�siblings were good�in studies -- two of them became doctors and�another�a lawyer. I was the odd one out. While my siblings studied in English medium schools, I was put in a Tamil medium school. I used to suffer from an inferiority complex�because of�my poor academic record.
Studies did not interest me, but�rearing pets did. When I was in the fifth standard, I had a lot of pets --�more than 500 pigeons,�a�lot�of fish and a large variety of birds. I used to�earn my�pocket money out of�pet business at that time. Perhaps, the entrepreneurial spirit�in me showed its first streak.
The origin of the concept of sachets
My father died as I�entered college.�He had come out with the sachet concept a couple of years prior to his demise. He felt liquid can be packed in sachets as well. When talcum powder was sold only in tin containers, he was the one who sold it in 100 gm, 50 gm and 20 gm packs.
When Epsom salt�came in 100 gm packets,�my father�brought out salt sachets�of as low as 5 gm.
'Whatever I make, I want the coolies and the rickshawpullers to use. I want to make�my products affordable to them,' he used to say.�
Selling things in sachets�was his�motto as he said, 'this is going to be the product of the future.' But�my father�could not market the concept well. He�moved from one innovation to another but never thought of marketing strategies. He was a great innovator, but a poor marketer.
Joining the family business
After my father's death, my brothers took charge of the family business. In 1982,�when I joined them after my studies, they had�launched�Velvette Shampoo. Within�eight to�nine months, I left the�business because my ideas�clashed with theirs.
As I was in the manufacturing unit, I did not know anything about marketing or finance. But, my�inferiority complex notwithstanding, I�was somehow confident�of doing�business better.
Starting his own business with�Rs 15,000
I had left�my brothers saying that I did not want any stake in the�property or business. That was a defining moment for me. I had saved�Rs 15,000 from my salary and that was all I had. Yet I was confident of achieving success.�I�did not feel anything�about riding a bicycle after having got used to cars.
For a week, I�could not make up my mind as to what�business to do. I knew only two things; making shampoo and rearing pets. I didn't want to�venture into the shampoo business as it�would initate a fight with my brothers. However,�I decided to do the same�later as I�could only make shampoo.
I�rented a house-cum-office�for Rs 250 a month against an advance of Rs 1,000. I took another place for�the factory for a rent of Rs 300 a month and�against an advance of Rs 1,200. I bought a shampoo-packing machine for Rs 3,000.
How Chik Shampoo was born
I named�it Chik Shampoo after my father.�The product did not succeed immediately;�we learnt�many things�during the process. In the first month, we could sell 20,000 sachets and from�the second year, we started making profits.
I moved to Chennai in 1989 but our manufacturing unit continued to be�in Cuddalore.�It took me three years�to get�the first�loan because banks asked�for collateral. I did not have any. But�one particular bank gave me a loan of Rs 25,000�which we rotated and later�upgraded�to Rs 400,000, Rs 15 lakh (Rs 1.5 million), etc.
You know what the bank manager�wrote in our loan application? 'This person does not have any collateral to offer but there is something�interesting about this SSI unit. Unlike others, this company pays income tax!'
I must say�my business never looked back because I was very particular�about paying�income tax.
Strategies�that made Chik Shampoo No. 1 in South India
When�Chik entered the market,�Velvette Shampoo�was being marketed aggressively by Godrej. But a scheme of ours became extremely successful -- we exchanged five sachets of any shampoo for�a Chik Shampoo sachet, free.
Later, we altered the scheme�--�we started�giving one free Chik Shampoo sachet�in lieu of�five�Chik Shampoo sachets only. Soon, consumers started asking for Chik sachets only.�The sales went up from Rs 35,000�to Rs 12 lakh (Rs 1.2 million)�a month.
When we introduced jasmine and rose fragrances, our sales went up to Rs 30 lakh (Rs 3 million)�per month and with actor Amala as�our model, our sales rose�to Rs 1 crore (Rs 10 million)�a month! Each idea of ours was rewarded by our customers.�There has been no looking back since then.
Our market share increased and in 1992, we became the numero uno in South India. It took nine years for me to overtake my brothers' business.
How Chik Shampoo conquered the rural market
Multinational companies sold products in big bottles and not in sachets and they�sold only from fancy stores. They�did not look at the small kirana stores, nor did they look at the rural market.
We went to the rural areas of South India where people hardly used�shampoo. We showed them how to use it. We did� live demonstration on�a young boy. We�asked those assembled to feel and smell his hair.
Next�we�planned�Chik Shampoo-sponsored shows of Rajniknath's films. We showed our advertisements in between,�followed by�live demonstrations.�We also distributed�free sachets among�the audience after these shows. This worked wonders in rural Tamil Nadu and Andhra Pradesh. After�every�show,�our shampoo sales went up�three to�four times.
Today, the Indian rural market is growing�at a�pace double than that of the urban market.
Launching Meera Herbal powder
We continued with Chik Shampoo for seven years before�venturing into anything else.
Meera Herbal powder was actually not our idea. Shaw Wallace already had a herbal product but it was marketed very poorly. We felt there was a�demand for�herbal products and�we made�a good product. I felt we should be the�leader if ours was a good product. And guess what? In the third month itself, we�topped the market. In�six months, we had 95 per cent market share,�while Shaw Wallace had only�4-5 per cent.
How Beauty Cosmetics became CavinKare
As we�planned to expand to new�products, we thought the name Beauty Cosmetics would be restrictive.�In 1998, we ran a contest among�our employees for a name and one of them suggested�CavinKare; with C and K spelt in capitals. CK, my father's initials. Cavin in�Tamil means beauty and grace.
Perfumes for the poor
We wanted to cater to those�who cannot afford (high priced) perfumes. Good perfumes�came at a huge price -- they were beyond the means of ordinary�people.�We decided to come out with a Rs 10 pack Spinz.�We were successful in that too.
Shampoo market share
In the last two to three years, our market share has come down though we are growing. It is mainly because of the anti-dandruff shampoos in the market. We do not have an anti-dandruff shampoo yet. From 0 per cent, the anti-dandruff shampoos have taken over 25 per cent of the market.�
Only 75 per cent of the market, therefore, constitutes�ordinary shampoos. We hold 20�per cent�of�the�market share.�
But we are the largest brand in rural Uttar Pradesh,�Andhra Pradesh, etc. and�we are�the number one in many other states as well.
On the decision to launch a fairness cream
We decided to launch Fairever in 1997 as we saw a huge�demand fairness cream.�We are the second largest player in the market in this.
Research�states that�when a product is good,�consumers do not�shift to a new brand.�Our team told me not to venture into the fairness cream market as the consumers were�quite satisfied with the existing products. But we went�to launch our product�containing saffron --�which is�traditionally used�to get a fair complexion. In�six months, our sales galloped.
This was followed by Indica hair dye.
Two and a half years ago, we launched Ruchi pickles in sachets and we�became number one there too. We sell close to 5,000 tonne of pickles per annum. We hope to double this in�two to�three years. Food is a huge market: we have understood that.
Our target is to be a Rs 1,500 crore (Rs 15 billion) company in another three years.
Reasons behind his success
Teamwork is the main reason for our success. We have good professionals who�work really hard. The second reason of our success is innovation. We have executed innovative ideas as well.
CavinKare Ability Award
This month, we�presented the 5th CavinKare Ability Foundation awards for physically disabled achievers.
I stayed as a tenant at Jayashree Ravindran's place�(the woman who started the Ability Foundation). Once, she said� she wanted�to start a magazine for the disabled. Though she did not ask for�sponsorship, I gave her a cheque of Rs 25,000. I also became one of the Foundation's founder members.
Once we came to know about�the disabled�who have�climbed the ladder�of�success, we -- Ability Foundation and CavinKare�-- decided to institute an award for�them.
I feel each of us has to give something back to the society. I have great admiration for those who fight against all odds and�attain success. When I started my career, I�only faced�shortage of funds but these people tide over graver difficulties.�We�must applaud their fighting spirit.
C K Ranganathan, chairman and managing director of�CavinKare.
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